S. 2382: Trusted Foreign Auditing Act of 2025

This bill, titled the Trusted Foreign Auditing Act of 2025, aims to amend the Sarbanes-Oxley Act of 2002 to enhance the oversight of foreign public accounting firms, particularly those based in countries identified as threats to U.S. national security. Here are the key provisions and changes introduced by the bill:

1. Definition of Key Terms

The bill introduces specific definitions related to auditing firms:

• Compromised Auditor: Refers to an independent branch or office of a registered public accounting firm (or its subsidiary) that meets certain criteria, such as being controlled or influenced by a "covered country" or having compromised independence due to relationships with foreign governments or political parties.
• Covered Country: Identified as countries that pose a threat to U.S. national security, based on reports from the Director of National Intelligence.

2. Inspections of Public Accounting Firms

The bill revises the process concerning inspections of public accounting firms, specifically:

• It establishes that if a public company is based in a covered country and employs a compromised auditor, certain trading prohibitions will apply to that company.
• The law requires disclosures when a firm has retained a compromised auditor to perform their audits, as well as consequences for failing to comply.

3. Trading Prohibition

If a company based in a covered country uses a compromised auditor for its audit reports, it will face trading prohibitions. These prohibitions restrict the buying and selling of stocks for that company, affecting investors and market operations.

4. Public Hearings

The legislation modifies the procedures for public hearings related to auditing matters:

• Hearing details will remain private unless a compromised auditor involved in the hearing is present or the Board decides otherwise for good cause.

5. Enforcement and Compliance

These changes emphasize the necessity for transparency and accountability in the auditing processes of companies associated with potentially compromised jurisdictions, aiming to protect investors and maintain trust in financial disclosures.

Relevant Companies

None found